Coalition ready to let property values fall

Emy1501

Degenerate wrote: »

Please do enlighten me as to how things work in the alternative reality you inhabit.

RBS and HBOS's problems were caused by their investments in the US and investing in things they never understood. UK defaults etc are lower now than in the 1990's.

The reality is whilst their balance sheets may not look great if there is a 25% fall in house prices the facts is low interest rates will stop defaults etc. Lower House prices over the next few years if they come will come from the fact that FTB's can only afford so much for a house/flat and with less competition this will have an effect on how much a FTB property costs this will then have a knock on effect up the chain.

I don't know how much say lloyds Mortgage book is valued at but if its 400b and 25% is knocked off. Then I suspect they may have to find an extra 10B maybe to shore up their balance sheet. I can't see them going bust for that and I suspect most of our banks are over capitalised at the moment anyway in case of problems like a 25% fall etc. Didn't the FSA stress test and suggest UK banks could withstand falls of total 35% etc from peak?

Back at the end of 2008 Early 2009 when the banks were being recapitalised the talk was for fall of total 30-35%. We are about 10% from peak now so further falls of 20-25% would take us to those levels. I can't believe that this would not have been taken into account at the time and therefore there seems little evidence that our banks would not withstand falls of a further 20-25%.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6377688.ece

The above suggests that our failed banks had to show that they could withstand total falls of 50% and unemployment of 12% etc. Of course whether they will be able to is another question but seems like the FSA are comfortable with falls of 35%

dopester

I can tell this thread/article has shaken up those who had ruled out Government allowing the market to find its own way.

Those who assumed Government would be forever funding of mortgage rescue schemes, or whipping up banks to force them to lend to idiots with their arms wide open wanting to rush to buy property whatever the price, in order to stop house prices falling.

They won't let it happen? Oh yes they will. They can't avoid it anyway, without causing even worse economic feedback problems.

Apply the squeeze. Shake out the overstretched debt-heads who took decisions on the assumption that there was only going to be boom forever, and those who've treated their homes as cash-machines.

Some people will feel the pain, but my sympathy is limited to younger people, such as in shared ownership, who really bought into the end of boom and bust fairytale of The Great Ruiner and his party.

Llubrevlis

HAMISH_MCTAVISH wrote: »

:rotfl:

A fall of that magnitude would absolutely guarantee an election defeat come 2015, not to mention take down the wider economy with it.

Not going to happen.

Its going to be a slow bleed, to be of that magnitude will show after 2015.

House prices and rents are slowly going down every year this next decade.

Thrugelmir

Emy1501 wrote: »

RBS and HBOS's problems were caused by their investments in the US and investing in things they never understood. UK defaults etc are lower now than in the 1990's.

RBS's problems followed its overpriced acquistion of ABN Amro to double in size. When the credit crunch hit, Asian investors pulled large sums of deposited wholesale funds out of RBS's far eastern operations causing a liquidity problem for the group. RBS at its peak had operations in 57 countries around the world so when the global downturn hit, it hit RBS broadside.

HBOS is a UK domestic operation which was hit by its poor lending practices to both the Corporate and Personal. Like NR when the wholesale money markets dried up it hit liquidity problems.

pop_gun

HAMISH_MCTAVISH wrote: »

:rotfl:

A fall of that magnitude would absolutely guarantee an election defeat come 2015, not to mention take down the wider economy with it.

Not going to happen.

bull! ***********

Pennywise

From my friends, family and associates, house prices certainly aren't the main topic of conversation and barely even figured in the discussions about the general election voting intentions. I'm middle aged and so are most of the people I regularly talk to. Most of us bought our homes about a decade ago and have accepted that we're basically trapped in our homes because we can't afford to up-size due to the high house prices. None of us want to see house prices rise anymore as it makes our next move even more impossible. The next generation of my friends and family havn't a hope of getting on the property ladder and they know it - they're destined to rent or live with parents until house prices come down again. I, for one, would love house prices to come down because the differential between mine and my next home will also fall, making the leap more possible. I've never understood why a home owner would want rampant house price inflation as it does them no good until they come to downsize upon retirement when they can finally take some value out of their bricks and mortar and spent it on something more fun. The only people I see who benefit are property investors, i.e. BTLers etc and to be blunt I'm not that bothered if they don't get the returns they dreamt of. There are more homeowners living in their own homes than there are property speculators, so higher prices is only welcomed by a very small proportion of the voting public - hence a fall in house prices won't significantly affect the voting intentions as most people don't want house prices to keep rising at ridiculous levels.

neverdespairgirl

Gorgeous_George wrote: »

The ConDems have been with us for just over 2 months. We've had 2 maniacs on the loose (Bird and Moat) and been embarrassed in the World Cup.

I can't quite see any cause and effect, there, though?

Harry_Powell

I'm shaken that my home may be worth less tomorrow than it was worth today. Does this mean I have less money in my pocket today than I had yesterday? I'm confused!

Gorgeous_George

neverdespairgirl wrote: »

I can't quite see any cause and effect, there, though?

My guess is that there will be more maniacs with guns over the next few years than at any time in our history.

Just a hunch.

Less people = cheaper housing

If England had done well in the World Cup, Moaty would have been enjoying chicken and lager with his mate Gazza (in their dressing gowns I guess).

GG

Thrugelmir

Gorgeous_George wrote: »

My guess is that there will be more maniacs with guns over the next few years that at any time in our history.

Just a hunch.

Wealth divide = resentment ?